As Americans watched with horror at the mounting death toll and near-total shutdown of the nation’s economy caused by COVID-19, news broke that Senate Intelligence Committee Chair Richard Burr (R-N.C.) had dumped millions of dollars of stock he owned just hours after receiving a classified briefing about the looming crisis — even as he assured the public that the coronavirus situation was under control. These actions sparked widespread outrage on both the left and the right. Reports soon followed that Sen. Kelly Loeffler (R-Ga.) and other officeholders also engaged in stock transactions in the early days of the COVID-19 outbreak.
Sen. Burr, and perhaps Sen. Loeffler, may have violated the STOCK Act, which prohibits members of Congress and other public employees from using private information received through their official positions for personal benefit. It makes such actions punishable by criminal statute. Just two months ago, former Rep. Chris Collins (R-N.Y.) was sentenced to more than two years in prison for capitalizing on his congressional position to engage in illegal insider trading.
Americans have every reason to be outraged that these senators appear to have used their insider knowledge of a global pandemic to profit financially. It is now up to the Department of Justice — which has already opened an investigation on Sen. Burr — to determine whether charges are merited. What is certain is they have undermined the public’s trust in government at a moment when confidence in our political system is desperately needed — and yet dangerously fragile. (For his part, Sen. Burr has asked the Senate Select Committee on Ethics to investigate the matter, but it is worth noting that the committee has a poor track record of taking action on violations of Senate ethics rules in recent years.)
The events of the past few weeks make painfully clear that Congress should strengthen existing prohibitions on self-dealing by officeholders. American citizens want — and expect — members of Congress and other federal government employees to follow the law and act exclusively in the public interest, rather than for their own personal gain.
To most effectively stop insider trading and reduce financial conflicts of interest, each chamber of Congress should move expeditiously to revise its rules to make clear that representatives and senators have two options.
Before being sworn in, members could divest their stock holdings, selling all securities and commodities, and refraining from any such purchases or investments while in office. Divestment eliminates the ability to use a position of power for personal profit and has been used frequently by high-ranking executive branch officials. If, for some reason, a member of Congress does not wish to divest, he or she should then be required to place their relevant financial assets into a qualified blind trust (diversified mutual fund excepted). The Ethics in Government Act of 1978 created qualified blind trusts and encouraged members of Congress to use them to avoid the appearance of corruption.
Current congressional rules already spell out the parameters to ensure that a “blind trust” is genuinely “blind.” To qualify, the trustee who operates the fund must operate personally and professionally independent of the officeholder. It is only “blind” if the members of Congress do not know about the nature of the trust’s investments or activities. A self-proclaimed blind trust that is run by a family member, a partner, or even a third-party involved in a business or financial venture with the officeholder is not “blind” at all, and should not qualify.
While it is unlikely that Congress will act on a rules change at this moment, it is possible for every senator and representative to make their own public commitment to refrain from trading stock while in office. They could also publicly recuse themselves from voting on matters in which they have significant holdings.
There are many hard lessons to be learned in this time of national crisis. One of the most important lessons? It is crucial for the American people to have faith that their public officials are not using their position and the information they are privy to for their own private gain.
Meredith McGehee, the executive director of Issue One, is one of the nation’s foremost experts on Congress and ethics in politics and has been described as one of the most in-the-know persons about lobbying, money-in-politics, media policy and the Washington, D.C., political scene.
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